Jerry was injured in a construction accident and was awarded a structured settlement that pays him $73,500 every January for the next 25 years. Jerry was up late one night and saw a J.G. Wentworth commercial offering immediate cash in return for settlement payments.

a. If Ralph sells his 25 payments for $750,000 today, what would his opportunity cost be (in dollars) if he could reasonably expect to earn 7% on his money?

b. What rate of return will J.G. Wentworth earn on his investment?

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